Colorado Losing Millions to Worker Misclassification

In these two stories I analyzed data on random audits conducted by the Division of Unemployment Insurance of the Colorado Department of Labor and Employment and used statistical methods to estimate the rate of misclassification and unpaid premiums to the state as a whole. The results were validated by two statisticians who are officers of the Colorado-Wyoming chapter of the American Statistical Association.

I found Colorado state lost an estimated $114 million to $124 million since 2011 and the rate of misclassified workers has more than doubled, from at least 6 percent of the work force to at least 13 percent, according to the analysis. The average amount of unpaid premiums has also nearly doubled from at least $69 to $124 per employee annually.